Post by
BCdude on Jun 03, 2022 2:20pm
Very Unhappy
This is one of the most ridiculous financings I have ever seen, and reminds me the dangers of playing in the microcap space. They're raising far too much money at far too low a price, and is the exact opposite of how Verde Agritech has managed their diultion.
I one transaction they are adding what will likely be 43.7 million shares to the float at $0.25, not to mention another 43.7 million warrants that are effectively going to cap the price for the next four years.
What I would have expected from them during an equity transaction:
How about raising less capital at a slightly higher price -- say, $6 million @ $0.30, which would have added 20 million shares.
Half warrants at $0.45 would add another 10 million shares.
Warrants expiring in 24 months instead of 48 months.
TOTAL share count if all warrants exercised would be ~30 million shares
Instead, this is what we got:
$10.9 million @ $0.25, which adds 43.7 million new shares if overallotment option is exercised (which I would assume it will be due to high demand).
FULL warrants at $0.32 adds another potential 43.7 million shares.
These low-priced warrants are expiring in FOUR years.
TOTAL share count if all warants exercised will be ~87.4 million shares.
So, we're almost DOUBLING the share count to raise a paltry $10.9 million, which will actually end up being less once broker fees, etc, are extracted.
This management team may be able to execute on the agricutlural side of things, but they have so far proven incapable of executing on the financing side.
This will probably not go much higher than $0.35 for a number of years, because if it begins to rise there will be tens of millions of cheap warrants to flood the market.
Sigh. I sold most of my position this morning.
Comment by
BarstoolSage on Jun 03, 2022 3:09pm
Yes agreed. I sold just under half in accounts with one gain and one loss essentially breaking even. IT IS FERTILIZER AND A HOT MARKET Your scenario would have boosted the share price some with secured financing and the warrants would provide a nice upside Whoever structured this knows something I don't ...
Comment by
1condor on Jun 04, 2022 3:42pm
Good to see I am not alone in my thinking of what a joke this financing was. I am no longer a holder of this company based on this idiot financial move by management. Good luck to those still holding.
Comment by
BCdude on Jun 06, 2022 2:55pm
Yes, it's particularly sad when you see another company like Verde building a company without excess dilution. Not sure what explains this other than a complete lack of business sense, or a perhaps just a disregard for exsiting shareholders.
Comment by
1condor on Jun 07, 2022 6:17pm
iscfa...Fire the CEO? That wont happen. Just sell your position and dont look back. I sold out the day the news was released knowing that more downside was inevitable. Plain and simple...companies who do amateur financing moves like this are not looking out for investors.
Comment by
Luckierjack2 on Jun 08, 2022 1:06pm
Go back and look at history. These guys are serial financers. Never ends. Good luck to all LJ